The mistake in all this has to do with a misunderstanding of inflation and deflation.
As a result, central banks are now walking the economy on a very thin tightrope between inflation and deflation.
Economists, though, too often confuse normal marketplace price changes with inflation and deflation.
Inflation and deflation are monetary phenomena, yet Brown seems to want to attach to all price movements the two adjectives.
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The point here is to understand where we are in the cycle between inflation and deflation and then to invest accordingly.
How has he managed to produce simultaneous inflation and deflation, when lesser Fed Chairmen have had to choose one or the other?
Slow growth, high unemployment, capital constraints and falling prices are frequently the symptoms of both despite inflation and deflation being two different ills.
The US dollar went through periods of inflation and deflation in this period and its value was independent of the price of gold.
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Under the leadership of Ben Bernanke, the U.S. Federal Reserve has done the seemingly impossible: It has managed to create inflation and deflation at the same time.
While the inflation hedge argument is thrown around, gold appears to be resilient both to inflation and deflation, suggesting it is acting more as a fear gauge.
The opposite of both inflation and deflation is stable money.
He justifies the proposal on the grounds that it will cure inflation and deflation, a dubious claim John Tamny has illustrated not even Mundell himself could possibly believe.
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And for those who wish to avoid both inflation and deflation, what about a digital currency programmed to maintain stable prices, avoiding mischief by central bankers as well as the possibility of deflation?
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One possibility is that, with inflation and deflation both plausible consequences of a debt crisis, investors are spreading their bets, buying gold as a hedge against the former and bonds as a hedge against the latter.
Monetary instability--inflation and deflation--distorts that information mechanism.
And already, because of inflation in Brazil and price deflation in Argentina, the real exchange rate between them is close to its pre-devaluation level.
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Generally, he looks at the impact of inflation, deflation and monetary velocity.
So some currencies would have to experience inflation and others severe deflation.
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This internal adjustment might involve inflation in surplus countries and deflation in deficit countries.
All I got out of this first glance was that inflation is the sun and deflation is a black hole.
The mathematically inclined, inflation has three sub variables: inflation, deflation, and disinflation.
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Substitute deflation for inflation and you'll begin to understand what's hitting us and the world today.
Deflation, Inflation and Why Paul Krugman Fears Austerity by Addison Wiggin originally appeared in the Daily Reckoning.
Finally, even when the US did have a Gold Standard 1873 to 1934, there were periods of intense deflation and inflation.
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The debate over whether we are in for inflation or deflation was alive and well at the Agora Symposium in Vancouver this week.
China, for the last number of years, has imported, first of all, deflation, low inflation and disinflation.
Obsessing over inflation while it is falling and while deflation is emerging as a possibility is not helpful.
And that response might overshoot somehow and cause higher inflation (or deflation).
To be sure, southern European countries are running huge trade deficits with the northern tier (especially Germany), but as long as all are tied together by the common currency, internal cost and price adjustments (deflation in the south, inflation in the north) will be slow and painful, and will do little to spark growth for Europe as a whole.
"Such conduct of monetary policy will support the positive movements in economic activity and financial markets, contribute to a rise in inflation expectations, and lead Japan's economy to overcome deflation that has lasted for nearly 15 years, " the bank said in its policy statement.
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